Previous attempts to digitalize documentary trade finance have fallen short because each project has focused only on a narrow slice of the entire paper-intensive process. Blockchain promises to address the current bottlenecks and offer a number of benefits, including faster turnaround times, as shown in this chart, improved service levels, and a way for each participant to see all the steps involved from purchase order to payment. Several potentially scalable blockchain platforms are becoming available, but to realize the technology’s potential, industry participants will need to agree on networks with common standards and business rules.
Sen Ganesh and Thomas Olsen are partners with Bain & Company’s Financial Services practice. Joshua Kroeker is Director and Blockchain Lead at HSBC Commercial Banking. Venkatraman P is Director and Global Head of documentary trade at HSBC. They are based, respectively, in Bangkok, Singapore, Hong Kong and Hong Kong.